VZCZCXRO2505
RR RUEHMA RUEHPA
DE RUEHAR #2385/01 3130758
ZNR UUUUU ZZH
R 090758Z NOV 07
FM AMEMBASSY ACCRA
TO RUEHC/SECSTATE WASHDC 5692
RUEHZK/ECOWAS COLLECTIVE
RUEHLMC/MILLENNIUM CHALLENGE CORP

UNCLAS SECTION 01 OF 05 ACCRA 002385 
 
SIPDIS 
 
DEPT FOR AF/EPS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ETRD EFIN ECON GH
 
SUBJECT: Ghana - National Trade Estimate 2008 
 
REF: State 119765 
 
ACCRA 00002385  001.2 OF 005 
 
 
¶1.  Summary.  This cable contains Embassy Ghana's submission for the 
2008 National Trade Estimate Report.  As instructed reftel, a copy 
in Word format was submitted via e-mail to USTR.  End Summary. 
 
 
¶2.  Begin Text of National Trade Estimate: 
 
TRADE SUMMARY 
------------- 
(Not updated, per reftel instructions) 
 
The U.S. goods trade surplus with Ghana was $98 million in 2006, a 
decrease of $81 million from $179 million in 2005. U.S. goods 
exports in 2006 were $290 million, down 14.1 percent from the 
previous year. Corresponding U.S. imports from Ghana were $192 
million, up 21.3 percent. Ghana is currently the 97th largest export 
market for U.S. goods. 
 
The stock of U.S. foreign direct investment in Ghana in 2005 was 
$230 million (latest data available), down from $238 million in 
¶2004. 
 
IMPORT POLICIES 
--------------- 
 
Tariffs 
 
Ghana is a Member of the WTO and the Economic Community of West 
African States (ECOWAS).  Along with other ECOWAS countries, Ghana 
adopted a common external tariff (CET) in 2005.  The ECOWAS CET 
requires that members simplify and harmonize ad valorem tariff rates 
into four bands: zero duty on social goods (e.g., medicine, 
publications); 5 percent duty on imported raw materials; 10 percent 
duty on intermediate goods; and 20 percent duty on finished goods. 
Currently, Ghana maintains 190 exceptions to the CET. Tariff rates 
for the items covered under exceptions are within the 0 percent to 
20 percent range, but will require some increase or decrease to 
align with the CET. Ghana, along with six other Anglophone 
countries, is currently in a transition period and is negotiating 
the exceptions with ECOWAS.  The transition period ends December 
¶2007.  The deadline for agreement on a comprehensive ECOWAS CET is 
January 2008 but this deadline may not be met. 
 
 
The Ghanaian government continues to support domestic private 
enterprise with financial incentives and tax holidays in order to 
develop competitive domestic industries with export capabilities. 
Nevertheless, Ghanaian manufacturers and producers contend that the 
country's relatively low tariff structure puts them at a competitive 
disadvantage vis-`-vis imports from countries that enjoy greater 
production and marketing economies of scale. Conversely, the 
relatively low tariff structure reduces producer costs for imported 
raw materials and inputs, so there is also some local demand for 
further tariff reductions, especially on inputs used by local 
businesses. Since 2004, the Ghanaian government has responded by 
reducing the import duty on livestock inputs, pharmaceutical raw 
materials, and inputs for textiles production. In addition, there is 
a zero tariff on some imported manufacturing raw materials.  Further 
adjustments both upward and downward may occur as the CET process 
moves ahead.  Tariff information is available on the Customs Excise 
and Preventive Service (CEPS) website (www.cepsghana.org). 
 
Non-Tariff Measures 
 
Importers are confronted by a variety of fees and charges in 
addition to tariffs. Ghana levies a 12.5 percent value-added tax 
(VAT) plus 2.5 percent National Health Insurance Levy on the 
duty-inclusive value of all imports and locally-produced goods, with 
a few selected exemptions.  In addition, Ghana imposes a 0.5 percent 
ECOWAS surcharge on all goods originating from non-ECOWAS countries 
and charges 0.4 percent of the sum of the free on board (FOB) value 
of goods and VAT for the use of the automated clearing system, the 
Ghana Community Network (GCNet).  Further, under the Export 
Development and Investment Fund Act, Ghana imposes a 0.5 percent 
duty on all non-petroleum products imported in commercial 
quantities. Ghana also applies a 1 percent processing fee to all 
duty-free imports.  All imports are subject to destination 
inspection and an inspection fee of 1 percent cost, insurance, 
freight (CIF). Importers have indicated that they would prefer a 
flat fee on each transaction. The destination inspection services 
are currently provided by four private companies licensed by the 
government of Ghana. Importers are lobbying the Ghanaian government 
to shift the provision of destination services from the four 
licensed companies to Ghana Customs because of the cost and delays 
incurred as a result of having an outside provider. 
 
 
ACCRA 00002385  002.2 OF 005 
 
 
In July 2007, ad valorem excise tax on locally produced and imported 
malt drinks, water, beer, and tobacco products was replaced with 
specific rates.  This is the outcome of a study sponsore by 
Coca-Cola for the GoG.  The previous ad valorem excise tax was 
between 5 percent and 140 percent for these products.  Specific 
rates are now charged on liter basis depending on the level of 
alcohol content.  Carbonated soft drinks now attract 0.04 GHC per 
liter, while malt drink attracts 0.05 GHC per liter excise tax. 
Tobacco products have a range of 0.01 GHC to 0.03 GHC per stick 
depending on quality    . An examination fee of 1 percent is applied 
to imported vehicles. Imported used vehicles that are more than 10 
years old incur an additional tax (penalty) ranging from 5 percent 
to 50 percent of the CIF value of the used vehicles. Ghana Customs 
maintains a price list of vehicles that it uses to determine the 
value of used vehicles for tax purposes. There are complaints that 
this system is non-transparent. The price list is not publicly 
available.  TheGCNet, site offers an online tool to help determine 
value but the results do not have legal standing.  Only CEPS can 
make the authoritative determination. 
http://www.ghanatradenet.com/carValues/defaul t.asp. 
All communications equipment requires a clearance letter from the 
National Communications Authority. 
 
Each year, between May and October, there is a temporary ban on the 
importation of fish, except canned fish, to protect local fishermen 
during their peak season. Ghana continues to ban imports of U.S. 
bone-in beef due to Bovine Spongiform Encephalopathy (BSE). 
Certificates are required for agricultural, food, cosmetics and 
pharmaceutical imports. The procedures are cumbersome. Permits are 
required for poultry and poultry product imports. The permit process 
is time-consuming, and at the time the permit is issued, 
a non-standardized quantity limit is imposed.  Ghana prohibits the 
importation of meat with a fat content by weight greater than 25 
percent for beef, 42 percent for pork, 15 percent for poultry, and 
35 percent for mutton. It also restricts the importation of 
condensed or evaporated milk with less than 8 percent milk fat by 
weight, and dried milk or milk powder containing less than 26 
percent by weight of milk fat, with the exception of imported skim 
milk in containers.  Imported turkeys must have their oil glands 
removed.  Effective November 1, 2007, the GoG imposed a temporary 
ban on the import of tomato paste and concentrates, citing "unfair 
trade practices."  Importers are challenging the ruling in court. 
STANDARDS, TESTING, LABELING AND CERTIFICATION 
 
Ghana has issued its own standards for most products under the 
auspices of its testing authority, the Ghana Standards Board (GSB). 
The GSB has promulgated more than 250 Ghanaian standards and adopted 
more than 3,057 international standards for certification purposes. 
The GSB determines standards for all products. Authority for 
enforcing standards for food, drugs, cosmetics, and health items 
lies with the Food and Drugs Board. 
 
In July 2005, Ghana instituted a "Conformity Assessment Program," 
which requires that some imported goods it classifies as "high risk 
goods" be inspected by the GSB officials at the port to ensure they 
meet Ghanaian standards before obtaining release from customs. The 
GSB has classified the high risk goods (HRG) into 17 broad groups, 
including food products, electrical appliances and used goods. The 
classification of items is vague and broad in scope and presents 
numerous questions regarding coverage. 
For example, the category of "alcoholic and non-alcoholic products" 
could feasibly include beverages, pharmaceuticals, and industrial 
products under the same classification. The process requires prior 
registration with GSB as an importer of HRG and a GSB approval to 
import HRG.  The importer must submit to GSB a sample of the high 
risk product, accompanied by a certificate of analysis or a 
certificate of conformance from accredited laboratories in the 
country of import.  Most often, the GSB officials conduct a physical 
examination and check labeling and marking requirements and ensure 
that goods are released within 48 hours. Currently, the fee for 
registering each HRG is GHC 100 ((about $93.50).  There is also a 
testing fee in addition to the registration fees.  This is not fixed 
but based on the number and kinds of parameters tested. The GSB has 
recently published most of their fees on their website 
(http://ghanastandards.org).  U.S. companies, however, have 
expressed concern that the standards which the program tests against 
are unknown and independent third party certifications and marks may 
not be recognized, resulting in costly and redundant testing. 
 
GOVERNMENT PROCUREMENT 
---------------------- 
 
Ghana is not a signatory to the WTO Agreement on Government 
Procurement. In December 2003, however, Parliament passed a public 
procurement law that codified guidelines to enhance transparency and 
efficiency and assign administration of procurement to a central 
body. 
 
 
ACCRA 00002385  003.2 OF 005 
 
 
In August 2004, the government inaugurated the Public Procurement 
Board. Individual government entities have formed tender committees 
and tender review boards to conduct their own procurement. Large 
public procurements are made by open tender and non-domestic firms 
are allowed to participate. A draft guideline being applied gives a 
margin of preference of 7.5 percent to 20 percent to domestic 
suppliers of goods and services for international competitive 
bidding.  Notwithstanding the procurement law, companies cannot 
expect complete transparency in locally funded contracts and 
allegations of corruption are fairly common. 
 
EXPORT SUBSIDIES 
---------------- 
 
The government uses preferential credits and tax incentives to 
promote exports. The Export Development Investment Fund administers 
financing on preferential terms using a 12 percent interest rate, 
which is below market rates. Agricultural export subsidies were 
eliminated in the mid-1980s. The Export Processing Zone (EPZ) Law, 
enacted in 1995, leaves corporate profits untaxed for the first 10 
years of business operation in an EPZ, after which the tax rate 
climbs to 8 percent (the same as for non-EPZ companies). Seventy 
percent of production in the EPZ zones must be exported. The current 
corporate tax rate for non-exporting companies is 25 percent. 
 
INTELLECTUAL PROPERTY RIGHTS (IPR) PROTECTION 
--------------------------------------------- 
 
Ghana is a party to the Berne Convention for the Protection of 
Literary and Artistic Works, the Paris Convention for the Protection 
of Industrial Property, the Patent Cooperation Treaty, the World 
Intellectual Property Organization (WIPO) Copyright Treaty and the 
African Regional Industrial Property Organization. Ghana has signed 
the WIPO Performances and Phonograms Treaty. Since December 2003, 
Parliament has passed six bills designed to bring Ghana into 
compliance with the TRIPS Agreement. The new laws address copyright, 
trademarks, patents, layout-designs (topographies) of integrated 
circuits, geographical indications, and industrial designs. 
Regulations to define the procedures for IPR protection and 
enforcement have not been promulgated. 
 
Piracy of copyrighted works is known to take place, although there 
is no reliable information on the scale of this activity. Holders of 
intellectual property rights have access to local courts for redress 
of grievances, although few trademark, patent, and copyright 
infringement cases have been filed in Ghana in recent years. 
Government initiated enforcement remains relatively rare but the 
Copyright Office under the Attorney-General's Office has initiated 
several raids on pirated  works and  the customs service has 
implemented collaboration with some companies to check import 
shipments for specific counterfeit products. 
 
SERVICES BARRIERS 
----------------- 
 
The investment code excludes foreign investors from participating in 
four economic sectors: petty trading, the operation of taxi and car 
rental services with fleets of fewer than ten vehicles, lotteries 
(excluding soccer pools), and the operation of beauty salons and 
barber shops. Provision of services by professionals such as 
lawyers, accountants, and doctors requires membership in a 
professional body.  Requirements for membership are identical for 
both Ghanaians and non-Ghanaians. 
 
Ghana has committed to offering access to foreign telecommunications 
providers for most basic services, but requires that these services 
be provided through joint ventures with Ghanaian nationals.  The NCA 
has yet to become an effective mechanism to resolve complaints of 
anticompetitive practices by Ghana Telecom, the state-owned national 
telecommunications operator. 
 
Ghana allows up to 60 percent foreign ownership in insurance firms. 
This cap does not apply to auxiliary insurance services, which 
allows 100 percent foreign ownership. Ghana allows foreign companies 
to provide a full range of services, as long as they are registered 
as companies in Ghana. 
 
Foreigners may participate in banking and other non-insurance 
financial services but there are some conditions relating to 
non-resident foreigners. Shares held by a single non-resident 
foreigner and the total number of shares held by all non-resident 
foreigners in one security listed on the Ghana Stock Exchange may 
not exceed 10 percent and 74 percent, respectively. The Central Bank 
must issue licenses for banking and leasing. For securities trading, 
a license is required from the Securities Regulatory Commission. 
Capital requirements for establishing a bank have been increased to 
7 million GHC (approximately $7.45million), and are now the same for 
both foreign-owned banks and Ghanaian-owned banks.  In October 2007, 
 
ACCRA 00002385  004.2 OF 005 
 
 
the Bank of Ghana proposed to increase capital requirement from GHC 
7 million to GHC 50 - GHC 60, effective January 2009. 
 
INVESTMENT BARRIERS 
------------------- 
 
The 1994 Investment Code (Act 478) eliminated the need for prior 
approval of foreign investment projects by the Ghana Investment 
Promotion Center. Registration, primarily for statistical purposes 
is required and is supposed to take no longer than five working days 
but often takes longer.   In order to improve its service, the Ghana 
Investment Promotion Center in 2007, introduced an online 
registration system http://www.gipc.org.gh/forms_page.aspx.   The 
World Bank reported in its "Doing Business 2008" report that the 
total time to start a business in Ghana was 42 days, an improvement 
from 81 days the previous year, attributable primarily to 
recognition by the Bank that obtaining a company seal, which takes 6 
weeks, is not mandatory. 
 
 Work visa quotas for businesses are in effect. The following 
minimum equity requirements apply, in the form of either cash or its 
equivalent in capital goods, for non-Ghanaians who want to invest in 
Ghana: $10,000 for joint ventures with a Ghanaian; $50,000 for 
enterprises wholly-owned by a non-Ghanaian; and $300,000 for trading 
companies (firms that buy/sell finished goods) either wholly or 
partly-owned by non-Ghanaians.   Due to some intense lobbying by the 
Ghana Union of Traders Association, the GIPC has proposed to 
government to increase the minimum equity for trading to $1 million. 
 Trading companies must also employ at least ten Ghanaians. 
 
 
ELECTRONIC COMMERCE 
------------------- 
 
Barriers to electronic commerce are mainly due to inadequate 
telecommunications and financial infrastructure.  The legal 
framework for electronic transaction has been drafted but is yet to 
be passed.   The payment system in Ghana is largely cash-based and 
use of credit cards brings a high risk of fraud.  The government 
plans to roll out a national switch that will link banks and 
financial institutions throughout Ghana and ease the way for 
expansion of point of sale and other electronic payments tools by 
March, 2008. 
  The Foreign Exchange Act passed in November 2006 provides a legal 
framework for the management of foreign exchange transactions and 
has   eased making foreign payments abroad. 
 
OTHER BARRIERS 
-------------- 
 
 There are frequent problems related to the complex land tenure 
system, and establishing clear title can be difficult. Non-Ghanaians 
can have access to land only on a leasehold basis. 
 
Frequent backlogs of cargo at the port hurt the business climate. 
The Customs Service phased in an automated customs declaration 
system that was established in the last quarter of 2002 to 
facilitate customs clearance. Although the new system has cut down 
the number of days for clearing goods from the ports, the desired 
impact has yet to be realized because complementary services from 
government agencies, banks, destination inspection companies, and 
security services have not been established. 
 
While we have seen a decrease in interest rates for some more 
established borrowers, the high cost of local financing (with 
short-term interest rates currently above 20 percent for most 
borrowers remains a significant disincentive for local traders, 
inhibiting the expansion of many Ghanaian businesses from their 
current micro-scale of operations. The high cost of credit in Ghana 
is a function of the high risks of doing business in Ghana. and 
directed lending to state-owned enterprises. Ghanaian banks are 
among Africa's most profitable. 
 
The residual effects of a highly regulated economy and lack of 
transparency in government operations create an added element of 
risk for potential investors. Bureaucratic inertia is frequently a 
problem in government ministries, and administrative approvals take 
longer than they should. Entrenched local interests sometimes have 
the ability to derail or delay new entrants, and securing government 
approvals may depend upon an applicant's local contacts. The 
political leanings of the Ghanaian partners of foreign investors are 
often subject to government scrutiny and corruption remains a 
challenge. 
 
RANKING of BARRIERS 
------------------- 
 
Removal of any barrier cited in this report would represent well 
 
ACCRA 00002385  005.2 OF 005 
 
 
under $10 million in potential U.S. exports.   Ghana, especially in 
the absence of increased regional integration, is a small economy, 
representing a small market. 
 
End Text of national trade Estimate. 
 
BRIDGEWATER